MBS RECAP: Uneventful on The Surface, But Plenty of Weakness

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Posted To: MBS Commentary

Frustrating day for market watchers today as bonds suffered moderate losses despite a complete absence of any compelling market movers. These sorts of things happen from time to time, but they tend to happen more readily as we approach the least liquid times of year with the lowest overall market participation. The 2nd half of December is best example of of this phenomenon. Ideally, traders would all agree to engage in an orderly march toward the center of the prevailing range, and with lower and lower volatility as 2019 winds down. Indeed, that happens quite often at the end of any given year. But it depends on an absence of a few big traders blasting an unprepared market with an unexpectedly large glut of buying/selling pressure. This happened on several occasions today, and the low liquidity…(read more)

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